Mia Salto wishes to determine how long it will take to repay a loan with initial

Question

Mia Salto wishes to determine how long it will take to repay a loan with initial proceeds $14000 where annual end-of-year installment payments of $2958 are required.

a. if Mia can borrow at an annual interest rate of 12% how long will it take for her to repay the loan fully?

b. how long will it take if she can borrow at an annual rate of 9%?

c. how long would it take if she has to pay 15% annual interest rate?

d. revealing your answers in part A B and C describe the general relationship between the interest rate and the amount of time it will take me to repay the loan fully

Explanation / Answer

Ans;

We can use formula function in M.S.Excelto calculate the time to repay the loan

The NPER function can be used to calculate the number of payments:

a- NPER/(9%,1868,11000,0,0) = 4.71 years

B- at15% rate of interest = 4.52 years

C- At 9% rate of interest =4.93 years

if interest rate increase payment to time decrease.

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